Transcription of Climate Bonds Taxonomy
1 1 Climate Bonds Initiative TaxonomyClimate Bonds Taxonomy SEPTEMBER 2021 Introduction Institutional investors are increasingly indicating their support for action to address Climate change. However, there are too few tools to help ensure that their investments are in credible, robust activities and are making a significant impact, particularly for debt based investments. The market needs independent, science-driven guidance on which assets and activities are consistent with a rapid transition to a low-carbon Climate Bonds Taxonomy identifies the assets, activities and projects needed to deliver a low carbon economy. Consistent with the 2 goals of the Paris Agreement.
2 It has been developed based on the latest Climate science including research from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), and has benefited from the input of hundreds of technical experts from around the world. It can be used by any entity looking to identify which assets and activities, and associated financial instruments, are compatible with a trajectory to net zero by released in 2013, the Climate Bonds Taxonomy is regularly updated based on the latest Climate science, emergence of new technologies and sector specific compatibleCompatible if compliant with screening indicatorNot compatibleMore work requiredCertification Criteria Approved EnergyTransportWaterBuildingsLand use & marine resourcesIndustryWaste & pollution controlICT28111213151617 Using this documentA traffic light system has been adopted to indicate whether identified assets and projects are considered to be automatically compatible with a C degree decarbonisation trajectory.
3 Green Light is automatically compatible. Orange Light is potentially compatible, depending on whether more specific criteria are met. Red Light is incompatible. A Grey circle is used to indicate where further work is required to determine which traffic light colour is appropriate for a specific sub-set of assets or activities. The Taxonomy is the foundation used by the Climate Bonds Initiative to screen Bonds to determine whether assets or projects underlying an investment are eligible for green or Climate finance. Where detailed analysis of a sector has been undertaken and specific eligibility Criteria have been developed, Bonds in that sector can be Climate Bonds Certified.
4 This is indicated via a blue Climate Bonds Certification tick . Where detailed sector based Criteria for Certification are still under development, this is indicated by a yellow circle. In this case, Bonds in this sector cannot yet be certified under the Climate Bonds under developmentClimate Bonds Initiative Taxonomy : Energy 2 EnergyELECTRICITY & HEAT PRODUCTIONA sset typeAsset specificsParis AgreementcompliantScreening indicatorCertifiableSOLARG enerationfacilities(power &heat) Photovoltaic generation facilities(onshore)Facilities shall have no morethan 15% of electricitygenerated from non-renewable sourcesConcentrated solar power facilities (onshore)
5 Supply chainfacilitiesManufacturing facilities whollydedicated to onshore solarenergy development such as PVcells & components, CSP dishes,troughs & components etcDedicated storage, distribution,installation, wholesale and retailInfrastructureDedicated transmissioninfrastructureDedicated supportinginfrastructure including inverters,transformers, energy storagesystems and control systemsWINDG enerationfacilities(power &heat)Onshore wind farmsSupply chainfacilitiesManufacturing facilities whollydedicated to onshore wind energy development such as wind turbinesDedicated storage, distribution,installation, wholesale and retailInfrastructureDedicated transmissioninfrastructureDedicated supportinginfrastructureGEOTHERMALG enerationfacilities(power &heat)Electricity generation facilitiesDirect emissions less than100gCO2/kWhDirect heat application such asGeothermal Heat Pump (GHP)
6 Supply chainfacilitiesManufacturing facilities whollydedicated to geothermalenergy developments such asgeothermal turbinesDedicated storage, distribution,installation, wholesale and retailInfrastructureDedicated transmissioninfrastructureDedicated supportinginfrastructureEnergy continues on page 3 ..> Climate Bonds Initiative Taxonomy : Energy 3 EnergyELECTRICITY & HEAT PRODUCTIONA sset typeAsset specificsParis AgreementcompliantScreening indicatorCertifiableBIO-ENERGYF acilities producing biofuel, biomass, biogas including fuel preparation process facilities, pretreatment facilities and biorefinery facilities (if 50% biomass based products produced for energy use)Facilities producing liquid biofuel, solid and gaseous biomass for heating and cogeneration(i) 80% GHG emission reduction compared to fossil fuel baselineAND(ii) Biofuel must be sourced from a sustainable feedstock (the only timber feedstock allowed is waste wood)
7 Facilities producing liquid biofuel, solid and gaseous biomass for electricity productionFacilities producing biofuel for transportGeneration facilities (power, heat & cooling)Electricity generation facilities such as biomass power station (i) Emissions of electricity generated must be lower than 100gCO2/kWhAND(ii) Biofuel must be sourced from a sustainable feedstock (the only timber feedstock allowed is waste wood)Heating facilities(ii) Emissions of biomass or biofuel used must be 80% lower than fossil fuel baseline and the energy efficiency achieved must be at least 80%AND(ii) Biofuel must be sourced from a sustainable feedstock (the only timber feedstock allowed is waste wood)Cooling facilitiesCombined Heat & Power facilitiesSupply chain facilitiesManufacturing facilities wholly dedicated to bioenergy developmentDedicated storage, distribution, installation and wholesale and retailBlending facilitiesInfrastructureDedicated transmission infrastructureDedicated supporting infrastructureEnergy continues on page 4.
8 > Climate Bonds Initiative Taxonomy : Energy 4 EnergyELECTRICITY & HEAT PRODUCTIONA sset typeAsset specificsParis AgreementcompliantScreening indicatorCertifiableHYDROPOWERG eneration facilitiesRun of riverIn operation before 2020 power density > 5W/m2; or GHG emissions intensity of electricity generated < 100gCO2e/kWh. Commencing operation in 2020 or after: power density >10W/m2; or GHG emissions intensity <50g CO2e/kWhANDMust perform an assessment, based on recognised best practice guidelines, of environmental and social risks and incorporate measures to address risksOnly for pumped storage: facility will not be charged with carbon intensive energy OR facility is contributing to a grid which has at least 20% share of intermittent renewablesImpoundmentPumped storageSupply chain facilitiesManufacturing facilities wholly dedicated to hydropower devel-opment such as hydro turbines and componentsDedicated storage, distribution, installation and wholesale and retailInfrastructureDedicated transmission infrastructureDedicated supporting infrastructureMARINE RENEWABLESG eneration facilities (power, heat & cooling)
9 Offshore wind farmsFossil fuel back up can only be used for restart capability and monitoring, operating or resilience measures in the event of no power in the systemOffshore solar farmsTidal and wave energy generation facilitiesOther marine electricity generation facilities using ocean thermals, salinity, gradients, etcHeating or cooling facilities using ocean thermalsMust achieve an 80% reduction in gCO2e/kWh compared to fossil fuel alternativeSupply chain facilitiesManufacturing facilities wholly dedicated to marine renewable energy development such as wind turbines and platforms, vertical and horizontal axis turbines, in-stream generators, etcDedicated storage, distribution, installation and wholesale and retailEnergy continues on page 5.
10 > Climate Bonds Initiative Taxonomy : Energy 5 EnergyELECTRICITY & HEAT PRODUCTIONA sset typeAsset specificsParis AgreementcompliantScreening indicatorCertifiableMARINE RENEWABLESI nfrastructureDedicated transmission infrastructureDedicated supporting facilities, such as transmission terminus and transformers, grid connections, dedicated facilities for supporting vessels, equipment storage and onshore assemblyFOSSIL FUELSG eneration facilitiesCoal or oil power without carbon capture and storage (CCS)Coal or oil with carbon capture & storage (CCS)CCS must capture 100% of GHG emissionsCoal or oil powered combine heat and power (CHP)Waste heat recovery from coal or oil fuelled power generationGas power without carbon capture & storage (CCS)Gas power with carbon capture & storage (CCS)Gas powered combine heat and power (CHP)Waste heat recovery from gas fuelled power generationMining and extractionCoal mining or oil extraction, refining, processing or production and associated supply chain infrastructureGas extraction, refining, processing or production and associated supply chain infrastructureNUCLEARG eneration facilitiesPower plantsDedicated supporting infrastructureMining facilitiesUranium miningOTHERG eneration facilities (heat)
